# HCA Healthcare, Inc. (HCA) — Narrative, Q3 2026

## Business

*Source: Annual Report on Form 10-K for the fiscal year ended December 31, 2025, accession 0001193125-26-044769, unless noted.*

HCA Healthcare describes itself as one of the leading health care services companies in the United States. It owns and operates hospitals and the outpatient networks around them, and it is paid for patient care by commercial insurers and managed care plans, by Medicare and Medicaid (directly and through managed plans), and by patients. At December 31, 2025 it operated 190 hospitals (179 general acute care, seven behavioral and four rehabilitation hospitals, with 50,436 licensed beds in total), 121 freestanding ambulatory surgery centers and 31 freestanding endoscopy centers in 19 states and England. Its acute care hospitals provide inpatient, intensive, cardiac, surgical, diagnostic and emergency care; around them HCA runs freestanding emergency rooms, urgent care clinics, imaging and oncology centers, physician practices, home health, hospice and rehabilitation services. At September 30, 2026 it operated 189 hospitals, 117 freestanding surgery centers and 30 freestanding endoscopy centers (10-Q, accession 0001193125-26-437871), and the third-quarter earnings release counts approximately 2,600 ambulatory sites of care (accession 0001193125-26-432665).

**Where the revenue comes from.** Revenues were $75.600 billion in 2025. By payer, the mix was:

- Managed care and other insurers: $36.968 billion (48.9%)
- Managed Medicare: $13.435 billion (17.8%)
- Medicare: $11.273 billion (14.9%)
- Medicaid: $5.909 billion (7.8%)
- Managed Medicaid: $3.693 billion (4.9%)
- International managed care and insurers: $1.864 billion (2.5%)
- Other, including uninsured patients: $2.458 billion (3.2%)

Medicare and Medicaid programs together supplied 45.4% of 2025 revenues. Commercial payers usually reimburse at higher rates than government programs or uninsured patients, so the share of commercially insured patients drives margins. That share is the main issue of 2026 (see Current quarter). Medicaid revenue also includes state supplemental and state directed payment (SDP) programs, which brought in approximately $6.2 billion in 2025, against $5.5 billion in 2024 and $4.4 billion in 2023.

**Operating structure.** HCA reports one line of business, operating hospitals and related health care entities, managed through three geographic groups. Each one's 2025 revenue and adjusted segment EBITDA is shown below:

- **National Group** (53 hospitals at year-end 2025: Alaska, California, Idaho, Kentucky, Nevada, New Hampshire, North Carolina, Tennessee, Utah, Virginia): revenues $21.278 billion; adjusted segment EBITDA $5.103 billion.
- **Atlantic Group** (63 hospitals: Florida, Georgia, Northern Kansas, Missouri, South Carolina): revenues $24.709 billion; adjusted segment EBITDA $5.642 billion.
- **American Group** (66 hospitals: Colorado, Central Kansas, Louisiana, Texas): revenues $26.445 billion; adjusted segment EBITDA $6.296 billion.
- **Corporate and other**, which includes the hospitals in England (eight at year-end 2025, seven at September 30, 2026): revenues $3.168 billion.

**Concentration.** Florida and Texas account for about half of the business. At year-end 2025 HCA had 47 hospitals and 27 surgery centers in Florida, with $17.856 billion of 2025 revenue, and 55 hospitals and 38 surgery centers in Texas, with $20.962 billion. Together the two states generated 51% of revenues, 59% of admissions and 73% of uninsured admissions. Neither state has adopted the Affordable Care Act Medicaid expansion.

**Strategy and scale.** HCA aims to deepen its existing markets rather than spread thinly. Its plan is to recruit physicians, build service lines such as cardiology, neurology, oncology, orthopedics and women's services, and add outpatient access points around its hospitals. It uses central purchasing, revenue-cycle, supply-chain and staffing platforms to run these networks at scale. It is also implementing a new electronic health record platform across its facilities and investing in digital and AI capabilities. The workforce was approximately 320,000 employees at December 31, 2025, including about 90,000 part-time and PRN staff. Certain employees at 35 domestic hospitals are represented by unions. The professional liability risk is mostly self-insured through a captive insurance subsidiary, which covers losses up to $120 million per occurrence (from January 1, 2026), subject in most cases to a $15 million per-occurrence self-insured retention. Affiliates of the founding Frist family held approximately 31% of the common stock as of January 31, 2026 and have board nomination rights under a stockholders' agreement.

## Risk factors

*Source: Form 10-K for fiscal 2025, Item 1A, accession 0001193125-26-044769. The Q3 2026 10-Q (accession 0001193125-26-437871) reports no material changes to these risk factors.*

The risks that matter most for HCA are about who pays and how much. Federal policy changes in 2025–2026 bear on both.

- **Loss of insured patients.** The enhanced Exchange premium tax credits expired at the end of 2025. Together with the 2025 Federal Budget Act (FBA) and a June 2025 CMS rule tightening Exchange enrollment, HCA expects this to reduce Exchange enrollment and significantly raise the uninsured rate. Domestic private payers were 48.9% of 2025 revenues, and losing those patients lowers revenue per case. The FBA also imposes Medicaid work and community-engagement requirements in expansion states by December 31, 2026 and moves eligibility redeterminations for expansion adults to every six months.
- **Medicaid financing and supplemental payments.** The FBA restricts provider-tax arrangements, which states use to fund their share of Medicaid. New provider taxes, and increases in existing ones, are barred for state fiscal years beginning on or after October 1, 2026. The 6% safe harbor falls by 0.5 percentage points a year in expansion states from fiscal 2028 until it reaches 3.5%. The FBA also caps SDP rates at 100% (expansion states) or 110% (non-expansion states) of Medicare rates instead of average commercial rates. Grandfathered arrangements step down 10 percentage points a year from 2028. HCA expects these changes to affect payment rates in many of its states, including Texas. Its supplemental and SDP revenue, about $6.2 billion in 2025, depends on annual CMS approvals that it cannot time.
- **Medicare rate pressure.** Annual rate updates (about 2.6% for most payment systems in 2026) are reduced by productivity adjustments. Sequestration cuts Medicare payments by 2% through early federal fiscal 2033. Other pressures include site-neutral payment, a 0.5% annual outpatient offset for past 340B payments that began in 2026, and the three-year phase-out of the Medicare inpatient-only list, which moves procedures to outpatient and surgery-center settings.
- **Payer utilization controls.** Prior authorization, utilization review, downcoding and claim denials reduce admissions, surgical volume and reimbursement. CMS's WISeR model, which applies AI-assisted prior authorization to fee-for-service Medicare, begins in six states in 2026, including Texas.
- **Uninsured volume and collectability.** At December 31, 2025, implicit price concessions of $7.674 billion had been recorded against receivables. The estimated cost of total uncompensated care was $4.605 billion in 2025. Any rise in uninsured or patient-responsibility balances flows directly to results.
- **Labor.** HCA competes for nurses and other clinicians in short supply. Wage pressure, contract labor, union organizing, strikes and nurse-staffing ratio mandates could all raise costs that fixed or annually negotiated reimbursement may not cover. Recruiting and retaining physicians, most of whom are not HCA employees, also drives admissions.
- **Leverage.** Debt totaled $46.492 billion at December 31, 2025 and $50.493 billion at September 30, 2026. Debt service, refinancing on acceptable terms, a financial-ratio covenant in the unsecured credit facility and rising rates on variable-rate debt (mostly commercial paper) all limit flexibility.
- **Florida and Texas concentration and weather.** About half of revenues come from two hurricane-exposed states. Hurricanes Helene and Milton cost an estimated $250 million in 2024 expenses and lost revenue. Property insurance covers only claims above deductibles and self-insured retentions, and may not cover all losses.
- **Cybersecurity and technology.** HCA holds protected health information, and its care delivery depends on connected systems. Ransomware or a breach, at HCA or at a vendor, could disrupt care and create liability. The company-wide EHR conversion carries execution risk, and AI use brings new regulatory and accuracy risks.
- **Regulatory and legal exposure.** HCA is exposed to fraud-and-abuse laws (the Anti-kickback Statute, Stark Law and False Claims Act, including whistleblower suits), certificate-of-need limits on expansion, and antitrust scrutiny of acquisitions. Professional liability claims are mostly self-insured. In December 2023 HCA was notified that district attorneys in four California counties were investigating the waste-disposal practices of HCA's California facilities. HCA does not expect a material impact.
- **Competition.** HCA competes with not-for-profit and tax-supported hospitals, physician-owned specialty hospitals, freestanding surgery and emergency centers, and payers that use narrow or tiered networks. Price-transparency rules may also weaken its negotiating position.

## Management's discussion — fiscal 2025

*Source: Form 10-K for fiscal 2025, Item 7, accession 0001193125-26-044769.*

In 2025, volume growth, better pricing and some cost leverage raised earnings faster than revenue. Revenues rose 7.1% to $75.600 billion from $70.603 billion. Equivalent admissions grew 2.9% and revenue per equivalent admission 4.0%; on a same-facility basis revenue grew 6.6%. Admissions rose 2.7%, emergency room visits 1.6% and inpatient surgeries 0.9%, while outpatient surgeries slipped 0.2%. Net income attributable to HCA rose 17.8% to $6.784 billion, or $28.33 per diluted share, compared with $5.760 billion, or $22.00, in 2024. Per-share growth outpaced net income because diluted shares fell to 239.495 million from 261.806 million after 26.739 million shares were repurchased in the year. The 2024 comparison included about $250 million, or $0.73 per diluted share, of hurricane-related costs and lost revenue.

**Costs.** Salaries and benefits fell to 43.5% of revenues from 44.1%, and contract, overtime and other premium labor costs declined from 2024. Same-facility salaries and benefits per full-time equivalent rose 3.3%. Supplies fell to 15.0% of revenues from 15.2%: medical-device cost per equivalent admission rose 7.0%, mainly cardiovascular technology, while pharmacy cost fell 4.0%. Other operating expenses held at 21.0% of revenues. Interest expense rose to $2.248 billion from $2.061 billion because the average debt balance increased to $44.731 billion; the average effective rate was unchanged at 5.0%. The effective tax rate, excluding noncontrolling interests, fell to 23.2% from 24.5%.

**Payer mix in 2025.** Managed Medicare's share of admissions kept rising (27%, from 26% in 2024 and 25% in 2023), while traditional Medicare's share fell (19%, from 20% and 21%). Uninsured patients made up 7% of admissions in each of the three years. The estimated cost of uncompensated care rose by $239 million to $4.605 billion.

**Cash and capital allocation.** Operating cash flow rose to $12.636 billion from $10.514 billion. HCA spent $4.944 billion on capital expenditures and $397 million on acquisitions, including two hospitals in New Hampshire and Florida. It returned capital through $10.067 billion of share repurchases and $679 million of dividends ($0.72 per quarter). Indebtedness rose by a net $3.287 billion, and debt totaled $46.492 billion at year-end. During 2025 HCA moved to an unsecured capital structure. A new five-year $8.000 billion senior unsecured revolving credit facility replaced its secured asset-based revolver ($4.500 billion), its secured cash-flow revolver ($3.500 billion) and its $1.238 billion secured term loan. HCA issued $5.250 billion and then $3.250 billion of senior notes and started a commercial paper program, with $2.207 billion outstanding at year-end.

**Outlook given with the annual report.** Excluding any further CMS approvals, management expected SDP revenues to decline in 2026. It also expected Exchange administrative reforms and the expiration of the enhanced premium tax credits to hurt 2026 results, offset in part by resiliency (cost-efficiency) initiatives. Planned 2026 capital expenditures were $5.0–5.5 billion. At year-end 2025, projects under construction had about $7.1 billion of remaining cost to complete.

## Current quarter — Q3 2026 (three months ended September 30, 2026)

*Sources: Form 10-Q for the quarter ended September 30, 2026, accession 0001193125-26-437871; third-quarter earnings release (Form 8-K Exhibit 99.1), accession 0001193125-26-432665.*

In Q3 2026, volume growth and cost control were outweighed by a shift toward uninsured patients. Revenues rose 3.6% to $19.849 billion, on a 2.8% increase in equivalent admissions (3.0% same-facility) but only a 0.7% rise in revenue per equivalent admission (6.1% in the year-earlier quarter). Net income attributable to HCA fell 3.9% to $1.579 billion. Diluted EPS still rose 4.5% to $7.27 from $6.96, because diluted shares fell to 217.212 million from 236.181 million. The quarter included $13 million ($0.05 per share) of gains on facility sales. Income before income taxes fell 2.0% to $2.370 billion, and the adjusted EBITDA margin (a non-GAAP measure) narrowed to 19.7% from 20.2%.

**The payer-mix shift.** HCA estimates that the move toward uninsured patients cut third-quarter income before income taxes by approximately $400 million, the same estimate it gave for the second quarter. It attributes the shift mainly to patients who lost Exchange coverage after the enhanced premium tax credits expired and administrative reforms took effect. Same-facility uninsured admissions rose 27.4% from a year earlier, after 15.5% in Q1 and 23.4% in Q2. The 10-Q also cites fewer Medicaid conversions. Uninsured patients made up 8% of admissions, against 6% a year earlier, while managed care and insurers fell to 31% from 33%. The estimated cost of uncompensated care rose to $1.477 billion from $1.188 billion, and charity care cost to $562 million from $408 million.

**Volumes.** Same-facility admissions rose 2.7% and emergency room visits 5.1%, but surgery declined: inpatient surgeries fell 1.4% and outpatient surgeries 3.7% on a same-facility basis. Average length of stay was 4.6 days, against 4.7. In Florida and Texas, HCA's 103 hospitals produced 58% of admissions, 51% of revenues and 73% of uninsured admissions.

**Costs.** Salaries and benefits fell to 43.2% of revenues from 43.6%. Salaries and benefits per equivalent admission fell 0.2%, while same-facility salaries per full-time equivalent rose 2.7%. Supplies fell to 14.2% from 14.5%, with supply cost per equivalent admission down 1.4%: medical devices -2.5%, pharmacy -2.3%, general medical and surgical -0.9%. Other operating expenses rose to 23.0% of revenues from 21.8%; for the nine months, HCA attributes the increase mainly to growth in Medicaid supplemental-program expenses and professional fees. Interest expense rose to $607 million from $561 million, as average debt rose to $49.743 billion from $44.400 billion while the average rate fell to 4.8% from 5.0%. The effective tax rate, excluding noncontrolling interests, rose to 24.8% from 23.9%, mainly because of lower deductible share-based compensation.

**By group (adjusted segment EBITDA, Q3 2026 against Q3 2025).** Results diverged across the three groups:

- National Group: $1.480 billion, up from $1.348 billion, on revenues of $5.738 billion (from $5.525 billion).
- Atlantic Group: $1.288 billion, down from $1.339 billion, on revenues of $6.421 billion (from $6.142 billion).
- American Group: $1.555 billion, down from $1.580 billion, on revenues of $6.848 billion (from $6.688 billion).

**Nine months.** Revenues rose 5.5% to $59.188 billion, and net income attributable to HCA was essentially flat at $4.898 billion ($22.05 per diluted share against $20.23). Medicaid revenue jumped to $5.998 billion from $4.413 billion. HCA cites the approval of certain Medicaid state directed and supplemental payment programs, primarily Florida's for the program year October 1, 2024 through September 30, 2025. Managed care and insurer revenue was nearly flat at $27.671 billion against $27.432 billion, falling to 46.7% of revenues from 48.8%. In the Atlantic Group, which includes Florida, nine-month adjusted segment EBITDA rose to $4.554 billion from $4.153 billion. In the American Group, which includes Texas, it fell to $4.338 billion from $4.576 billion.

**Cash flow, capital and balance sheet.** Nine-month operating cash flow fell to $8.810 billion from $10.277 billion. Most of the decline came from $1.190 billion more in income taxes paid: in 2025, an IRS deferral let Tennessee-based taxpayers postpone estimated tax payments to the fourth quarter. Working-capital changes also cost $472 million. Capital expenditures were $3.707 billion for the nine months and $1.357 billion in the quarter, and remaining spending on projects under construction rose to about $8.6 billion. HCA spent $942 million in the nine months acquiring non-hospital health care entities; the filing does not name them. It sold a hospital in Virginia for $26 million and received $81 million from sales of real estate and other investments, for $22 million of pretax gains. For the nine months it repurchased 15.139 million shares at an average price of $430.01.

Over the nine months, repurchases ($6.605 billion), dividends ($519 million) and distributions to noncontrolling interests ($574 million) exceeded operating cash flow less investing outflows, and indebtedness rose by a net $3.788 billion. Total debt reached $50.493 billion at September 30, 2026, against $46.492 billion at year-end, including $5.727 billion of commercial paper (from $2.207 billion). Debt due within one year rose to $8.093 billion, leaving negative working capital of $3.560 billion. Excluding commercial paper, which HCA says it can refinance through its credit facility, working capital would have been $2.167 billion. HCA intends to keep unused capacity under its $8.000 billion credit facility at least equal to commercial paper outstanding, so the larger commercial paper balance also reduces available credit. Variable-rate debt rose to about $6.027 billion (from $2.507 billion at year-end), and HCA estimates a 1% rate rise would now reduce annual pretax earnings by about $60 million. Stockholders' deficit attributable to HCA widened to $8.077 billion from $6.027 billion at year-end, as repurchases and dividends exceeded net income.

## 2026 guidance

*Sources: earnings releases of July 14, 2026 (accession 0001193125-26-302539) and October 27, 2026 (accession 0001193125-26-432665).*

The Exchange problem has shaped HCA's 2026 outlook. On July 14 HCA lowered its 2026 earnings guidance. It raised its estimate of the full-year pretax drag from Exchange-related payer-mix shifts and changed its Medicaid supplemental-payment assumption from a net reduction to a net benefit. On October 27 it said it now expects results in the upper half of the July ranges. The guidance excludes gains or losses on facility sales, debt retirement losses, legal claim costs, impairments and the effect of any future state directed or supplemental payment approvals.

## Subsequent events

*Source: Form 10-Q for the quarter ended September 30, 2026, accession 0001193125-26-437871.*

The quarterly report has no separate subsequent-events note. Apart from the quarterly dividend declared on October 26, 2026, it discloses two developments after September 30, 2026. No acquisition, divestiture, debt offering or litigation outcome is disclosed after the quarter end.

- **Short-term borrowing and liquidity.** Commercial paper outstanding rose to $6.245 billion at October 26, 2026 from $5.727 billion at September 30. Availability under the senior unsecured credit facility, after letters of credit and the commercial paper backstop, fell to $1.709 billion from $2.226 billion.
- **Share count.** Common shares outstanding were 208,892,500 at October 26, 2026, against 210,880,500 at September 30, 2026.